Reporting Scope

and Methodology
for ESG Key
Performance
Indicators
Reporting Scope and Methodology for ESG Key Performance Indicators

Introduction The Selected ESG KPIs reflect the most

material issues to our business and
Nestlé has engaged EY to provide stakeholders, including major corporate
commitments and ESG performance measures
independent assurance of that drive executive compensation. For
the design of the Selected ESG KPIs, we
thirteen selected Environmental, considered voluntary reporting frameworks
Social and Governance (ESG) and standards such as the Global Reporting
Initiative, the Sustainability Accounting
key performance indicators Standards Board, and the World Economic
Forum Stakeholder Capitalism Metrics.
(KPIs) of high strategic Nestlé reports the performance against the

importance to our business. Selected ESG KPIs in our 2022 Creating

Shared Value and Sustainability Report,
This assurance engagement which is available on nestle.com. Six of the
Selected ESG KPIs are also included in our
was performed in accordance 2022 Annual Review.
This Methodology Note is applicable for
with the International Standard the 2022 reporting. Nestlé may review
on Assurance Engagements the methodology and the Selected ESG
KPIs annually to reflect changes to our
(ISAE) 3000 to provide limited business priorities, regulatory requirements,
industry best practices and standards, and
assurance. Nestlé obtained stakeholder feedback.

limited assurance for these Scope

KPIs to strengthen stakeholder “In Scope” companies
A company is “in Scope” of the Selected
confidence in the data we report ESG KPIs when the financial performance
of such company is consolidated in Nestlé
and in anticipation of increased S.A. consolidated financial statements in
regulation of sustainability accordance with International Financial
Reporting Standards (IFRS) issued by the
reporting and assurance. International Accounting Standards Board
(IASB), and excludes associates and joint-
This document explains the definition, Scope, ventures. Please refer to Nestlé’s consolidated
methodology and assumptions used to IFRS financial statements for further details.
calculate and report each of the thirteen KPIs Exceptions to this are described in the section
(the “Selected ESG KPIs”) that were selected ‘Acquisition & Divestiture’ below.
from a larger universe of ESG KPIs that Nestlé Data and performance of legal entities outside
decided to track and report. companies “in Scope” are not considered
for the Selected ESG KPIs unless specifically
described otherwise in this Note.
Reporting Scope and Methodology for ESG Key Performance Indicators

Acquisition and divestitures Selected ESG KPI List

Newly acquired entities during 2022 were not
considered for the Selected ESG KPIs, except
Environmental
when expressly stated otherwise in this Note1. 1. 1. a. Greenhouse Gas (GHG) emissions
As per our internal rules, acquisitions during reductions and removals
2022 will be included in the ESG reporting as 1. b. GHG emissions – Scope 1
from 1 January 2024. 1. c. GHG emissions – Scope 2
2022 data and performance of divested entities 1. d. GHG emissions – Scope 3
during 2022 were excluded from the Selected 2. Water use reduction in factories
ESG KPIs, except when expressly stated
3. Percentage of key ingredients
otherwise in this Note.
produced sustainably
Data collection 4. Percentage of deforestation free for
The data reported is covering the 2022 calendar primary supply chain
year unless mentioned otherwise in the 5. Percentage of plastic packaging
Selected ESG KPI details. Each KPI has its own designed for recycling
internal guideline including processes, tools, 6. Percentage of virgin plastic reduction
roles and responsibilities, a summary of which
10. Percentage of ingredients sourced through
is provided in this document. All data was
regenerative agriculture
extracted from our own systems or systems
from third parties with their authorization when Social
relevant. Data not available in the systems
7. Number of servings of affordable nutrition
was construed in good faith according to best
with micronutrient fortification (MNF)
practice and industry standards.
8. Number of young people around the world
who access economic opportunities
9. Women in the top 200+ senior
executive positions

1
Newly acquired entities will be included in Nestlé Tracking
and Reporting for the Selected ESG KPIs as from January 1st of
the following year once elapsed a period of 12 months from the
closing of the acquisition.
Environmental KPI The BAU scenario includes calculations
covering the following: ingredients,
1. a. GHG emissions manufacturing and packaging. It uses 2018
reductions & removals carbon intensity applied to the reporting
Performance Measure year activity data.
Sum of all the GHG emissions reductions and Limitations on the BAU scenario include the
removals achieved through the delivery of our fact that it is calculated on the partial scope
Net Zero Roadmap vs. business-as-usual (BAU) and it does not cover all the reduction projects
scenario, in million tonnes of CO2e. (examples of projects not included: ingredient
substitution to a less emissive ingredient,
Definition
change in the production location to a more
The latest report by the Intergovernmental
energy efficient location).
Panel on Climate Change (IPCC) has
reconfirmed that in order to limit global This KPI is reflecting the impact of our climate-
warming to 1.5°C above pre-industrial levels related investments and initiatives. While we
and avoid the most catastrophic impacts of are working on a KPI tracking progress towards
climate change, the world must halve GHG % of absolute Scope 1,2 and 3 emissions
emissions by around 2030 and reach net-zero reduction against 2018 baseline, currently its
GHG emissions by mid-century. progress is demonstrated through the annual
disclosure of our GHG emissions Scopes 1, 2
Recognizing the importance of keeping global
and 3 (see KPI 1.b,c,d).
warming to 1.5°C, companies are increasingly
adopting net-zero climate targets. Nestlé The quantification of GHG emissions removal
committed in 2020 to reach net-zero emissions remains the same as 2021. GHG emissions
as part of the Business Ambition for 1.5°C removal is defined as a quantity of GHG
campaign. The campaign is led by the Science expressed in carbon equivalent (CO2e) that is
Based Targets Initiative (SBTi) and backed transferred from the atmosphere to storage
by a global coalition of UN leaders, business within a non-atmospheric pool. We account for
organizations and NGOs. secured removals, it consists of both secured
(contracted) trees and their related lifetime
In the reporting year 2022, the methodology
secured carbon removal. This indicator pertains
to quantify GHG emissions reductions
to natural landscape restoration.
has been updated vs 2021, leveraging the
implementation of our GHG Performance Scope
System (GPS). In 2022, GHG emissions Net zero by 2050 commitment is regulated by
reductions are calculated by subtracting our the rules established by the SBTi following the
actual Scopes 1,2 & 3 (Net Zero scope) from GHG Protocol Corporate Standard. According
a BAU scenario depicting what the GHG to those rules, the calculation and reporting
emissions of the company would have been in criteria we have adopted is the following:
the absence of our Climate program. Where: – If a company is fully consolidated in the
– Actual Scopes 1,2 & 3 (Net Zero financial statements, we account for 100%
Scope) is tracked through the GHG of the emissions of the company
Performance System (GPS). – If Nestlé has 50% shareholding of a
– The BAU scenario is modelled based company, we account for 50% of the
on actual changes in activity data (e.g. emissions of the company
ingredients purchased volumes for – If Nestlé has less than 50% shareholding
ingredients, produced volumes for of a company, we account for 0% of the
manufacturing and, packaging volumes emissions of the company
for packaging) over time. The underlying
assumption is if we do not take any Acquisitions and divestitures are also treated
mitigation actions our GHG footprint will according to the rules established by the SBTi:
increase proportionately to these volumes. – For acquisition, GHG emissions footprint will
be captured from the date of closing
– For divestiture, GHG emissions footprint will
be captured until date of closing
Reporting Scope and Methodology for ESG Key Performance Indicators

The baseline and prior reporting period developed internally for GHG accounting
comparative values will be restated due to and reporting, the methodology governing
acquisitions, divestures and methodological the system is aligned with the GHG Protocol
improvements, in line with SBTi guidelines. corporate accounting standards. GPS uses
Scope 3 emissions are calculated as per the activity data directly from our central data
GHG Protocol categories. The categories systems (e.g. purchasing data from SAP,
“Processing of sold products”, “Downstream packaging data from our packaging tracker,
leased assets”, “Franchises”, and “Investments” etc.) and it is updated on a quarterly basis.
are excluded from calculation. The categories Scopes 1 and 2 actual GHG emissions are
“Capital goods”, “purchased services”, accounted in our manufacturing IT system
“upstream leased assets” and “use of sold SHE-PM. With the activity data and emission
products” are calculated but excluded factors collected in the system, it performs the
from SBTi Scope. calculation of the Group Scopes 1 and 2 GHG
emissions. GPS pulls data from Scopes 1 and 2
Performance data preparation directly from SHE-PM.
Our annual performance on GHG emissions
reduction and removals is evaluated through The GHG emissions are calculated as follows:
the evolution of actual GHG emissions as
tracked through our internal GHG accounting Activity data Main emission
system (GPS) (see KPI 1.b,c,d) compared to sources factors sources

a BAU scenario. Scopes 1 Factories energy IPCC, IEA,

and 2 consumption US EPA and DEFRA.
Our climate-related projects qualitatively reporting
Market-based
substantiate the GHG emissions reductions emissions are partially
calculated with residual
achieved. Although not contributing directly
mix emission factors (in
to the inputs into the calculation of the KPI, Europe and US only).
they do contribute indirectly in the calculation
Scope 3 Data from internal Various recognized
of our actual GHG emissions Scopes 1,2 and 3 ERPs. Assumptions sources depending
(see KPI1 b,c,d). backed by literature on categories: World
to extrapolate Food LCA Database,
Assumptions missing data DEFRA, IEA, etc.
We are following the GHG Protocol Corporate External EcoTransIT
calculator for upstream
standard and Guidance provided by the and downstream
Science Based Targets Initiative. transportation
and distribution

1. b. c. d. GHG emissions –
Scopes 1, 2 and 3
Performance Measure
GHG emissions Scope 1, 2 (location-based and
Assumptions
We are following the GHG Protocol Corporate
market-based) and 3.
standard and Guidance provided by the
Definition Science Based Targets Initiative.
Annual GHG emissions from Scopes 1, 2
(location-based and market-based) and 2. Water use reduction in factories
3 accounted following the GHG Protocol
Corporate standard and Guidance provided by
Performance Measure
m3 of water use reduced in our factories.
the Science Based Targets Initiative.
Scope Definition
Annualised savings from Nestlé factories
See section Scope of KPI 1.a.GHG emissions
obtained from qualifying improvement projects
reductions & removals
delivering benefits in 2022 and measured in m3
Performance data preparation of water saved during 2022.
Our actual GHG emissions Scopes 1, 2 and
3 are tracked through our internal GHG
Scope
All entities that are or were Nestlé
accounting system (GPS). GPS system was
factories during 2022.
Performance data preparation down into two separate KPIs: “Suppliers:
– A project contributes to savings only when it Maturity of HREDD Processes and Systems”
meets the qualifying criteria and “Origins: Performance of volumes at
• Existing Withdrawal: the project relates production level”. The reported percentage of
to an actual, existing and ongoing water key ingredients produced sustainably is based
withdrawal by the factory; solely on the Origins KPI criteria until 2025.
• Direct Cause: the project is the direct cause A. Suppliers: Maturity of HREDD
to the water use reduction; and Processes and Systems
• Permanent: the water use reduction This applies at the level of Nestlé’s Tier 1
achieved by the project is permanent. suppliers. This KPI is designed to deliver
full compliance with HREDD legislation
– Annual savings count towards the subject
and to ensure that suppliers are cascading
reporting year only when the savings have
HREDD requirements throughout their supply
been realized in that year
chain. This KPI will be reported against
– Total group savings for the year are from 2025 onwards.
calculated from the consolidated sum of
B. Origins: Performance of volumes at
savings from each project.
production level
– Project savings are calculated based on the
projected annualised saving following the This applies at the level of the production base
realization of the project. for volumes that Nestlé sources through its Tier
1 suppliers. This KPI is designed to assess the
– The annualised savings are calculated using performance of volumes at origin level against
the actual representative performance of the a number of social and environmental criteria.
project over the first full period of delivery
(e.g. full week, month), extrapolated for a This framework was introduced in 2021 as an
twelve-month period, using a rigorously evolution of our previous commitments, related
documented projection of performance. to the percentage of total volume traceable
and percentage of total volume responsibly
– Annualised savings contribute to the KPI
sourced, which ended in December 2020.
only for the months of contribution in
the current year Definition of the Produced Sustainably
– Any balance is carried forward in the Framework: completion timeline is 2025
following year for the remaining months Produced sustainably means that the
– Water usage and reduction cannot be origin of our priority ingredients is known
offset, assigned nor transferred between and the way they are produced has been
factories or third parties. Each water assessed as compliant with our Responsible
use and reduction is subject to the Sourcing Standard.
party that claims it. Operationally, the criteria to define if a raw
– A difference of usage arising as a result of material is produced sustainably are:
a change of meter readings is not a certain – The material is traceable back to
indication of a water savings project. the point of origin
– Human rights and environmental due
3. Percentage of key ingredients diligence (HREDD) systems are in place at
produced sustainably Tier 1 supplier level to assess, address and
Introduction report on the potential or actual impacts
The Produced Sustainably Framework is identified in the supply chain
designed to enable continuous improvement – The volumes Nestlé buys through its
across Nestlé’s supply chain to achieve Tier 1 suppliers are compliant with the
full implementation of Human Rights and Nestlé Responsible Sourcing Standard
Environmental Due Diligence (HREDD) and requirements at production level
delivery of positive impacts on people, nature,
and climate in Nestlé’s sourcing origins.
In order to achieve this, starting from 2022, the
Produced Sustainably Framework is broken
The rest of this chapter focuses on the For each key ingredient in scope, specific
definition and reporting of the KPI related to criteria have been defined to detail
Origins, which covers part of the Produced what certification, assessments and
Sustainably Framework definition including the programs are accepted.
following specificities:
Assumptions
– The material is traceable back to the point of Estimation methods in case of inconsistent
origin (group of farms or in case of the low- data or unavailability of the data vary by key
risk country approach: traceability required ingredient. In these cases, we either use
is back to subnational level). previous year’s data, benchmarked vs. previous
– The volumes Nestlé buys through its years to demonstrate consistency of supply
Tier 1 suppliers are compliant with the or accuracy or using industry average for
Nestlé Responsible Sourcing Standard, translating unit of sourcing into consistent unit
and requirements at production level (in of measures (particularly applicable for paper).
case of the low-risk country approach: no
assessment at supplier level, rely on the 4. Percentage of deforestation-free
Maplecroft risk assessment). for primary supply chain
Performance Measure Performance measure
Percentage defined by the total volume Percentage defined by the total volume
of priority ingredients in scope that are of commodities in scope assessed deforestation
considered as produced sustainably divided by free divided by the total volume of commodities
the total volume of priority ingredients in scope in scope (measured in tonnes) during the
(measured in tonnes) during the given year. given year.
Scope Definition
In scope for this KPI are Nestlé’s 14 priority key This KPI aims at ensuring that the commodities
ingredients: cereals and grains; cocoa; coconut; in Scope that we buy do not originate from:
coffee; dairy; fish and seafood; hazelnuts;
– Areas converted from High Carbon Stock
meat, poultry and eggs; palm oil; pulp and
(as defined by the High Carbon Stocks
paper; soy; spices; sugar; and vegetables.
Approach) forests and habitat such as
Performance data preparation peatland, wetlands, savannas
Ingredients are assessed as produced – Areas converted from natural ecosystems
sustainably (origins KPI) when they have been: – Peatlands of any depth, except where
– Mapped to sub-national production origins farming practices protect peat
in a low-risk country for human rights and – International Union for Conservation
environmental risks2 of Nature (IUCN) protected
Or have been assessed as compliant with our areas categories I-IV
Responsible Sourcing Standard through one of – UNESCO World Heritage Sites and wetlands
the following means: on the Ramsar List
– Selected sustainability related certifications
(e.g., Rainforest Alliance, RSPO, etc.), 2
The level of risk is based on the Maplecroft database for country
risks and the final score is an average of a social, rule of law and
– Second or third-party farm selected environmental scores:
sustainability assessments (e.g., Farm
Sustainability Assessment), Andorra France New Zealand
– On-the-ground programs in which Nestlé Australia Germany Netherlands
directly works with producers (e.g., Nestlé
Austria Iceland Norway
Cocoa Plan, Nescafé Plan or Nespresso AAA
Sustainable Quality™ Program). Belgium Ireland San Marino

These assessments are carried out within the Canada Latvia Sweden

farming supply shed of the primary processor Denmark Liechtenstein Switzerland

or first aggregator which supplies Nestlé Estonia Luxembourg United Kigdom
(directly or indirectly).
Finland Monaco Uruguay
Reporting Scope and Methodology for ESG Key Performance Indicators

Scope previous year’s data, benchmarked vs. previous

The commodities in scope include the direct years to demonstrate consistency of supply
supplies of palm oil (excluding margarine or accuracy or using industry average for
& creamers), pulp & paper (excluding office translating unit of sourcing into consistent unit
paper and paper labels), soy (excluding of measures (particularly applicable for paper).
lecithin and oil), meat (excluding by-products
and seafood meats), and sugar (excluding 5. Percentage of plastic packaging
caramel) for Nestlé. designed for recycling
Performance data preparation Performance measure
To implement the no-deforestation ESG KPI, Percentage defined by the total volume of
Nestlé applies a toolkit risk-based approach. plastic packaging designed for recycling
We map our supply chains to know where the divided by the total volume of plastic
commodities in scope are bought from. In at- packaging. Plastic packaging includes
risk origins, Nestlé takes steps to verify that our plastic packing put on Markets with
purchases are not contributing to deforestation the finished goods.
or conversion of natural habitats.
Definition
Based on this approach, the following volumes Nestlé has developed its publicly available
of commodities in scope are assessed as “Rules of Sustainable Packaging”, composed
deforestation-free: of the Golden Rules and the Negative List,
– Traceable to low-risk origin: Volumes have that are driving the sustainable packaging
been traced back to regions classified as transformation of the Group.
at low risk of deforestation (“not high-risk” Primary, secondary and tertiary packaging are
for Meat) using tools like, but not restricted taken into account in the calculation.
to, Maplecroft. The traceability exercise is
carried out in collaboration with our partners Packaging Designed for Recycling (D4R)
(e.g., Earthworm Foundation and Proforest) refers to packaging materials and formats
or using technology (e.g., SupplyShift) and, which are compliant with the Negative List
because of its low-risk nature, does not and aligned with the Golden Rules. It does
require additional verification. not systematically correspond to packaging
“recyclable in practice and at scale”, as per
– Assessed on the ground: Volumes have Ellen MacArthur Foundation’s3 definition , nor
been assessed through on-the-ground to packaging being “effectively recycled”.
assessments, including, but not restricted
to, e.g., High Carbon Stock Approach To date, given the very large number of
(HCSA) & High Conservation Values products and material specifications covered
(HCV) assessments, by our partners by the KPI and the limitations of the current
(e.g., Earthworm). information systems, the applicable criteria
used to assess if a plastic packaging is
– Assessed from the sky: Volumes have
Designed for Recycling (D4R) and compute
been assessed through satellite monitoring
the indicator during the 2022 reporting
of production sites (farms, mills or supply
are as follows:
area) in our supply chain identified through
traceability exercise. – Rigid plastics: Polyethylene Terephthalate
(PET), Polyethylene (PE), Polypropylene (PP)
– Certification: SGS and/or through
are considered as D4R;
certification such as Round Table on
Responsible Soy (RTRS) and Proterra (soya), – Flexible plastics: PP, PE and Polyolefins (PO)
Forest Stewardship Council (FSC) and based films are considered as D4R.
Programme for the Endorsement of Forest Following EMF definition, Beverage Cartons
Certification (PEFC) (paper), and Roundtable have been moved to paper-based materials.
on Sustainable Palm Oil (RSPO) (palm oil). All plastics KPIs and baselines have been
recalculated accordingly.
Assumptions
Estimation methods in case of inconsistent
data or unavailability of the data vary by key
ingredient. In these cases, we either use
3 https://ellenmacarthurfoundation.org/plastics-vision
Reporting Scope and Methodology for ESG Key Performance Indicators

Additional criteria from the packaging Assumptions

sustainability rules on material specifications For businesses where sales are in SAP but not
will gradually be included in future reporting, the production data (e.g. Co-Manufacturers),
including black color and black carbon color, packaging weight and composition is
Poly-Ethylene Terephthalate Glycol - PET G, estimated based on similar internal finished
Metalized materials, and separability from the product in the same category and same
other materials constituting the packaging. country. This limits the Scope of reporting
The KPI reflects the D4R status of the when we don’t have any similar in-house
packaging portfolio at the end of 2022. The KPI products (2% of our FERTs). Approximately
is calculated using the last available material 85% of the sold packaging weight in SAP is
specifications applied to the packaging covered by production data in 2022.
quantities of the full reporting period.
6. Percentage of virgin plastic reduction
Scope
This KPI covers all finished products sold by Performance measure
Nestlé, produced by Nestlé’s factories or by Percentage defined by reduction of usage of
co-manufacturers. virgin plastic between 2022 and 2018, divided
by total virgin plastic volume of 2018.
The KPI includes the sales of all entities that
are in SAP within the Group plus the sixteen Virgin plastic volume is obtained by deducting
biggest non-SAP businesses based on sales the recycled plastic volume from the total
less general reductions and allowances plastic packaging volume of the period.
and all Nestlé Waters entities. With this Primary, secondary and tertiary packaging are
method, the Scope covers 99% of the sales of taken into account in the calculation.
the Nestlé Group.
Definition
Performance data preparation Virgin plastic is defined as plastic
The main source of data for this KPI is SAP: that has not been previously used or
– Sales data is used to calculate packaging subjected to processing other than for its
quantities sold to consumers which are original production. It includes fossil and
reflected in the KPI. Each unit sold has a bio-based plastics.
defined weight of packaging maintained Recycled plastic is defined as pre-consumer
in the global master data, and the and/or post-consumer plastic packaging as per
corresponding weight is applied to all units the ISO 14021:2016 standard.
sold within the given year. The KPI reflects the recycled content of
– Production data is used to obtain the the packaging portfolio at the end of the
detailed composition of the packaging sold reporting period. The KPI is calculated using
(bill of materials, material specifications). the last available material specifications
Four exceptions are to be noted: applied to the packaging quantities of the full
reporting period.
– For Nestlé Waters, the KPI is exclusively
based on production data (packaging used Scope
to pack and deliver our products). Please refer to above KPI n°5.
– For the sixteen biggest non-SAP businesses, The total Nestlé baseline 2018 used to measure
the data collection is manually done using the virgin plastic usage reduction is restated to
an Excel template designed by Nestlé, or match the 2022 reporting Scope and considers
estimated based on the materials split of the divestiture and acquisitions since 2018:
product category.
– For divestiture: The Nestlé 2018 baseline is
– We do not report packaging of our Machines restated in the year 2022, by removing the
(e.g., Nespresso machines) contribution of divested companies from the
– We do not report quantities of total Nestlé baseline of 2018.
packaging that are used for samples, – For acquisition: The Nestlé 2018 baseline
donations or sponsorship is restated in the year 2022, by adding
the baseline of acquired companies
between 2018 and 2020 to the total Nestle
baseline of 2018.
Reporting Scope and Methodology for ESG Key Performance Indicators

If the 2018 baseline of an acquired company The techniques associated with regenerative
is not available, the closest succeeding agriculture improve the resilience of farmland
available baseline is used as a proxy for to climate change and can contribute to
the baseline 2018 (i.e., baseline 2019, or improve livelihoods, while reducing GHG
baseline 2020, etc. …) emissions. They include, among others,
enhancement of biodiversity, soil conservation,
Performance data preparation regeneration of water cycles and integration of
Please refer to above KPI n°5.
livestock. The Nestlé Agriculture Framework
Assumptions released in September 2022 describes Nestlé’s
Please refer to above KPI n°5. corporate vision for agriculture as a central
building block for a regenerative food system.
10. Percentage of ingredients sourced Regenerative agriculture being a journey,
through regenerative agriculture our KPI encompasses all farmers who have
embarked on the transition, with various
Introduction
maturity levels, from engaged in the journey
Nestlé is committed to source its key
with initial practices adoption to advanced
ingredients through care and respect for
and leading experts. This ranking of farm
individuals, communities, and the planet.
maturity levels is done through individual farm
Raw materials account for nearly two-thirds assessments carried out by Nestlé Agronomists
of Nestlé’s greenhouse gas (GHG) emissions, or third party partners.
with dairy and livestock making up about half
Nestlé has created crop-specific assessment
of that. Reducing emissions from agriculture
tools (Nestlé Regen Ag Farm Assessment
is crucial to achieving Nestlé net zero target.
Tools) which include checklists of regenerative
Nestlé is investing and is working with its food
agriculture practices and a scoring system.
system partners, including the company’s
These assessment tools allow us to classify the
network of more than 500 000 direct farmers
level of regenerative practices implementation
and many more via suppliers, to advance
at farms as Engaged (L1), Advanced (L2) or
regenerative farming practices at the heart of
Leading (L3) and to report accordingly the
the food system.
sourced volumes. The farmers who are not
As part of the Nestlé Climate Change Roadmap falling in any category are considered as
launched in November 2020, a new KPI “Key practicing conventional agriculture. The Nestle
Ingredients through Regenerative Agriculture” Agriculture Framework provides more detailed
was created in Q4 2021 which applies and is information on the criteria for the regenerative
being reported from 2022 onwards to track agriculture classification of farms.
progress against our commitments.
Scope
Performance Measure Scope of denominator of this KPI will be the
Percentage defined by the total volume of same this year and the coming years and
categories in scope from farmers qualified as includes the following categories: dairy (fresh
Engaged in transition towards regenerative milk and milk derivatives); coffee; cereals &
agriculture (Level 1), Advanced (Level 2) or grains; soy (excluding lecithin); vegetables
Leading (Level 3) divided by the total volume (including leguminous seeds); cocoa; palm
of categories in scope (measured in tonnes) oil; sugar; fish & seafood (co & by product
during the given year. excluded); meat, poultry and eggs (co & by-
Level 1 is an entry point in regenerative products excluded).
agriculture and constitutes a transition towards The scope of numerator is restricted in 2022
actual regenerative agriculture (Level 2 & to the following categories: agricultural raw
Level 3). Initially, a significant percentage materials from Nestlé Farmer Connect value
of regenerative volumes are linked to chain (Farmer Connect is the Nestlé direct
Level 1 farmers. procurement from farmers or upstream link to
Definition farmers established):
Regenerative agriculture is an approach to – Fresh milk in direct
farming that aims to protect, renew, and procurement/Farmer Connect
restore farmland and its ecosystem.
Reporting Scope and Methodology for ESG Key Performance Indicators

– Green coffee in direct Assumptions

procurement/Farmer Connect Estimation methods in case of inconsistent
– Green coffee sourced for Nespresso data or unavailability of the data vary by
commodity. In these cases, solutions can span
– Cocoa in Ecuador in direct
from using previous year’s calendar year data,
procurement/Farmer Connect
or using 12-months rolling averages. We take
– Nestlé Nutrition cereals and vegetables the assumption that volumes delivered to
– Selected raw materials for Nestlé France Nestlé by direct farmers are comparable from
(covered by Living Soils Project with one year to the next year.
Earthworm Foundation) In most of the Markets, the volume of individual
– Vegetables sourced from farmers for the farmers was recorded as per individual farmer
brand Libby’s in the US statement during the farm assessment. We
In 2023, additional ingredients will be added take the assumption that this is in line with
to the numerator of the KPI reporting as we the SAP volume delivered by the farmer to the
continue the implementation of the initiative. Nestlé Factory.
In 2025, the KPI numerator will cover the full For crop volumes (for example for Nestlé
Scope of the denominator as defined. France Living Soils): estimation method was
For the annual reporting, the total volume used applied by using contracted volumes from
is the actual volume delivered at factory level crop harvest 2022 and not delivered to factory
or its best estimate when closing data are not volumes 2022. This approach is justified as
available. These volumes are aligned with ESG in the end all contracted volumes will be
Produced Sustainably KPI volumes, for the delivered to factories.
same categories in Scope. Before the year-end
consolidation, during the year, a best estimate
is used (actual year n-1, rolling 12 months…).
Performance data preparation Social KPI
Sampling method is based on the following:
7. Number of servings of affordable
– In Farmer Connect/direct procurement
nutrition with micronutrient
from farmers: for the baseline assessment,
fortification (MNF)
statistically representative number of farms
is defined per product category at global Performance measure
level and if relevant at market level. The KPI is the number of fortified servings of
• Depending on the category, sampling affordable nutrition sold in emerging markets4
results are linked to the actual volumes based on the quantity sold, which is connected
of farms assessed and extrapolation to the sales in 2022.
is done on volume basis. Alternatively, The sales that meet the following two criteria
extrapolation to market volume can be are counted as part of the KPI:
carried out based on % of farms assessed. 1. Products which meet the definition as
This could apply in case of sourcing from Popularly Positioned Products (PPP)
smallholder farms. Affordable Nutrition and
– In indirect sourcing via suppliers, we cover 2. Products have been fortified with at least
all farmers in the upstream of material one of the Big 4 micronutrients (Iron,
supplied to Nestlé when possible. When Iodine, Vitamin A, Zinc) in accordance with
not possible, we cover at least a number the Micronutrient Fortification policy.
of farmers equivalent to the volumes
To determine number of servings, a serving
sold to Nestlé. This approach applies for
size is defined for each stock keeping unit
raw materials for Nestlé France covered
(SKU) and maintained in the SAP material
through the Living Soils Project with
master data. The serving size is a critical piece
Earthworm Foundation
of information that, when used in conjunction

4
As defined per World Economic Situation and Prospects 2021
| Department of Economic and Social Affairs (un.org)
Reporting Scope and Methodology for ESG Key Performance Indicators

with the recipe data, allows the amount of 8. Number of young people
nutrient (or ingredient) contained in the serving around the world with access
to be calculated in order to reach 15% NRV to economic opportunities
(Nutrient Reference Value) with at least one of
the Big 4 micronutrients. Performance measure
The KPI is the number of opportunities offered
Definition to young people, defined as individuals
PPP is Nestlé’s business strategy to provide below 30 years old, which include jobs
accessible products and affordable nutrition or the essential skills to prepare them for
to lower-income consumers in emerging economic opportunities.
countries through a competitive value chain.
Affordable Nutrition products are quality Definition
products with enhanced nutrition credentials The KPI is measured based across three pillars
(for example, nutrient-fortified products), that of activities: Employment & Employability,
meet the price point suitable for the target Agripreneurship and Entrepreneurship, with
market. Three categories drive Affordable the following sub-groups:
Nutrition: Dairy, Nutrition and Ambient Food. – Employment & Employability
Affordable nutrition with micronutrient • Get Hired (e.g. permanent and
fortification is defined as a serving of eligible temporary positions)
PPP affordable nutrition SKUs fortified with • Get Skilled (e.g. internships and
at least one of the Big 4 micronutrients (Iron, apprenticeships)
Iodine, Vitamin A, Zinc). • Get Support (in-person) (CV clinics,
Scope job fairs)
All Nestlé entities are integrated in the data • Get Support (digital) (e.g. live streams,
selection process. Some minor businesses are digital career fairs)
excluded from the report. With this method, we
– Agripreneurship
cover 99% of sales of the Nestlé Group in 2022
eligible for this KPI. – Entrepreneurship
As per the Nestlé Policy on Micronutrient • Entrepreneurs supported
Fortification of foods and Beverages all • Entrepreneurs as part of
products for infants below 36 months are Nestlé’s value chain
excluded from this KPI. • Young Culinary Talents
Performance data preparation • Young Veterinarians
Fortified servings in affordable nutrition are • Young Pediatricians
based on the quantity sold maintained in SAP • Young entrepreneurs who benefitted from
in the Nestlé Group during 2022. at least 50% of the training module from
The sales by SKU are measured based on the the YEP E-Learning Academy
following two criteria:
Scope
– SKU is eligible for PPP Scope includes all Nestlé entities “in scope”
Affordable Nutrition and plus Cereal Partners Worldwide (CPW)5 where
– SKU is eligible for the Micronutrient Nestlé manages the human resources function
Fortification policy for CPW (Nestlé global standard Human
The serving size as sold is defined for Resources Information System).
each SKU as per Nestlé data standard and Companies in the scope covers 99% of the
maintained in the SAP material master data. sales of the Nestlé Group.
The volume sold is divided by the serving size
to obtain the number of fortified servings sold.

5
CPW is a global joint venture 50%-50% between Nestlé
and General Mills.
Reporting Scope and Methodology for ESG Key Performance Indicators

Performance data preparation Definition

The data provided is collected at the country With its Gender Balance Acceleration Plan,
level across the three pillars during 2022. Nestlé puts further emphasis on increasing the
Each country then reports centrally the data proportion of women in the group’s top 200+
across the three defined pillars in order to be senior executive positions from around 20% to
aggregated centrally. 30% by 2022. This is another step in Nestlé’s
For all categories, the participants should journey towards gender parity.
not be counted if they declare themselves Scope
above the age of 30. Similar scope as the KPI 8 Youth above.
The reporting cut-off date for Get Companies in the scope covers 99% of the
support (Employment & Employability), sales of the Nestlé Group.
Entrepreneurship and Agripreneurship
data was on 10 December 2022. The Performance data preparation
reporting cut-off date for Get Hired and Get Basis for the calculation are reports from Nestlé
Skilled (Employment & Employability) was global standard Human Resources Information
31 December 2022. System on 31 December 2022.
The type of data collected and processed is The % of women holders of senior executive
adjusted for compliance with local regulations positions is calculated dividing the women
(e.g. age of participants may not be collected). current holders number versus the current
holders total population.
As mentioned above, it is not always possible
to check the age of attendees/participants Senior executive positions are
due to local regulations in some countries. defined as following:
This impacts countries contributing to – All Market Head positions
approximately 20% of the KPI. Further, even
– Business positions in charge of largest
in countries where it is possible to collect the
organizations within the Group
information, some participants do not disclose
their age. Therefore, as there is a possibility – Positions in charge of Group wide strategic
that some of the attendees are above 30, a functions and/or initiatives
global reduction coefficient of 5% is applied – Positions providing functional leadership to
centrally to the overall result. The reduction Executive Board Member or Key Markets
coefficient was determined by reviewing
Assumptions
data for countries were collecting the age
The gender of employees is informed by
was possible, where approximately 5% of
employees themselves and recorded in Nestlé
participants were over 30.
global standard Human Resources Information
Assumptions System, based on official identification (such as
The assumption is that each opportunity is a passport or national identity card).
linked to one person, although some people Any addition/exclusion to the top 200+ senior
may have had access to more than one executive positions is aligned/approved by
opportunity (e.g. training and internship). Group Head of Human Resources, in alignment
with other members of the Executive Board.
9. Women in the top 200+ senior
executive positions
Performance Measure
KPI is the ratio of women currently holding
senior executive positions versus the
total population of professionals currently
holding senior executive positions on
31 December 2022.